3.5.4 Labour market issues

• What are labour market issues broadly categorized into?

  Supply-side and demand-side
• A supply-side issue example is the lack of skilled workers due to inadequate education
• Demand-side issues can include unemployment resulting from an economic downturn.
• What are the two main categories of factors that cause unemployment?

  Supply-side and demand-side
• A supply-side cause of unemployment is skills mismatch
• What is an example of a demand-side cause of unemployment?

  Economic recession
• Match the issue type with its description:

  Supply-side ↔️ Problems with worker availability

  Demand-side ↔️ Problems with job availability
• Unemployment reduces tax revenues for the economy.
• How does unemployment affect businesses?

  Lower sales and profits
• The wage in the labour market is often represented as the product of the marginal product of labour and the price of goods
• What is the potential consequence of setting a minimum wage above the equilibrium wage?

  Unemployment
• Collective bargaining can influence wage rates above market equilibrium levels.
• What is a key difference between supply-side and demand-side labour market issues?

  Skills vs. job availability
• What are three significant economic and social impacts of unemployment?

  Reduced income, lower GDP, stress
• Unemployment is a key demand-side issue affecting the efficient functioning of the labour market.
• Unemployment reduces consumer demand and tax revenues.
• What are the primary factors influencing wage determination in the labor market?

  Supply and demand for labor
• Mathematically, wage is represented as the product of the marginal product of labor ($MPPL$) and the price of goods or services ($P$): Wage.
• A minimum wage set above the equilibrium wage can lead to unemployment.
• What is the purpose of collective bargaining in wage determination?

  Secure higher wages and benefits
• Match the policy category with its description:

  Supply-Side ↔️ Improve workforce skills and mobility

  Demand-Side ↔️ Boost demand for labor

  Minimum Wage Laws ↔️ Set wage floor for low-income workers

  Unemployment Benefits ↔️ Provide financial support to unemployed workers
• What is the definition of discrimination in the labor market?

  Unequal treatment based on characteristics
• The consequences of discrimination include reduced productivity and lower job satisfaction.
• The UK's Equal Pay Act has helped reduce gender wage gaps.